If you’ve been following the news, you may be aware that inflation is rising, gas prices are soaring, and the stock market has been stuck in an ongoing crisis. But how up to date are you on social security?
If you are not yet of an age where you charge benefits, Social Security may not be on your radar, and that’s understandable. But it is important to keep track of the program anyway.
First, these benefits may end up being an important source of income for you in the end. And also, the movements you make during your work years can set you up for higher benefits later.
Plus, even if you do not collect social security at the moment, if you make money, you pay taxes to fund it. And therefore it is important to understand what these taxes look like. With that in mind, here are a few recent changes to social security that you may not be aware of.
1. Benefits received an increase of 5.9%
Why should you worry about what increase social security got this year if you are not getting benefits yet? Namely because you need to know that 5.9% was the program’s biggest increase in decades – and it’s already falling short due to rapid levels of inflation.
In fact, understanding the shortcomings of social security should ask you to build one ready eggs your own instead of planning to fall back on these benefits later on. Chances are they will not do a good enough job of covering your living expenses for seniors – not even close.
2. The wage ceiling rose
Social security gets most of its revenue from payroll taxes. But workers do not pay these taxes on all their earnings. Instead, there is an annual ceiling that is put in place.
Last year, salaries of up to $ 142,800 were subject to social security taxes. This year, that ceiling has risen to $ 147,000. If you are a higher paid employee and you are not sure why your paychecks have dropped, this may be your answer.
3. The value of work credits increased
Being able to charge social security upon retirement is not a matter of course. To qualify for benefits, you must earn enough money to earn 40 work credits in your lifetime.
The value of an work credit changes from year to year and you can earn up to four work credits annually. Last year, a single work credit was worth $ 1,470 in earnings. This year, you need to spend $ 1,510 in earnings to get a work credit.
If you have a full-time job, work credits are something you probably do not have to worry about. However, if you work part-time, it pays to keep an eye on the value of work credits.
Although social security is not something you plan to collect for decades, it is still important to keep up with changes in the program. Some of these changes can affect you right away, even if you are years away from leaving the workforce forever.
Plus, as mentioned, knowing how the program works can help you make smart decisions when you are younger, leading to higher benefits. For example, if you are able to develop your job skills and achieve a pay rise, it can lead to more generous benefits. And that’s something your future I want to thank you for.